May 18, 2010

Ask any entrepreneur what it costs to make a hiring mistake and you’ll likely be met with a groan and a ‘double eye roll’. Everyone knows the costs:

The recruiting fees

The job postings

The time you spend interviewing

Your turnover rate causing increased UC contribution costs

The lawyer’s fees for the employment contract, figuring out how to break the contract, and sometimes additional fees–plus the tax on your time and patience–required to defend yourself against wrongful termination!

Think of these these costs as ‘direct damage’: a real strain on any entrepreneur’s budget, but not an unexpected cost of doing business. Bad hires happen. But wait…..have you considered the ‘collateral damage’?

No hiring decision happens in a vacuum. You need your team to be whole. You have a missing part. You seek to fill it in a way that capitalizes on the assets of your existing team members – and makes up for their deficits. That’s why prudent employers engage search specialists, scour resumes, do 360-degree interviews, personality tests, reference checks, and even credit checks (where allowed by law). But somehow, bad hires still happen, and when they happen to you, you’re naturally disappointed. Or worse. Because if you’ve pegged your hopes and plans on the wrong person, it’s the collateral damage that costs so much more than the hiring failure.

We all pride ourselves on being good judges of people, and we are — but only if we have the whole story, not just a collection of data components. If you have had the misfortune of more than one or two hires that turned out badly, you may even begin to doubt whether you (or your people) are even capable of hiring successfully. When all the signs–including ‘gut feel’ point to “YES”, and still a new hire turns out to be a dud, the first piece of collateral damage may be your self-confidence as an executive decision-maker.

And then there is the impact of the bad hire on the rest of the team. Here’s the worst part. The better your team is, the worse the collateral damage will be. If you have brought the bad hire in over people who are great performers, you’ll see the decline happening right before your eyes. And worse, it won’t take long before your they are plotting their next career move. And they aren’t likely to tell you because really – who is going to challenge the boss on a hiring decision?

Finally there is the adverse impact on present – and future – stakeholders. News travels fast, especially since the investor/entrepreneur ecosystem has the modern day equivalent of jungle drums and really knows how to play. You know what I mean: Twitter, LinkedIn, Facebook, and all those f-t-f networking events. Word gets around when someone (or some team) clearly doesn’t have the right stuff.

So in view of all this, wouldn’t it be great to know how someone will perform on your team – before you hire them? You can, but only if you are measuring for the right things: not just for individual characteristics – but for behavioral ‘Teaming Characteristics’, which are derived from a person’s Coherence and Role. (To our knowledge, TGI’s Role-Based Assessment is the only way to measure these.)

To minimize some of the collateral damage you have experienced in the past, consider this: there nothing wrong with your decision making. As an entrepreneur, you have a good sense of how to behave on a team because you know you can’t do it yourself. You respect people who apply their skills, their experience, and their deep commitment to your vision. Good decision making assumes good behavior. Since you are a team player, you’ll tend to expect others to be good team players–and unfortunately, some are not. In fact, some are truly toxic to team play. So keep on trusting yourself, and keep in mind that there is now a ‘new way to know’.